Best practices, updated every Wednesday

4 posts from December 2013

December 25, 2013

Next week, I will finish interviewing AmLaw 200 managing partners and senior executives for my study of Client Value and Law Firm Profitability, and in January we will begin formally analyzing the results. But I’ve been doing a lot of thinking about the data we’ve collected so far, and I must admit that the area I am most puzzled about is knowledge management (KM). Some of the firms I’ve interviewed have been extremely pleased with their results, and others have been very disappointed, and I am still trying to figure out why.

Part of the problem may be that there are so many approaches to KM, and even different definitions of the term. KM is built around the idea of systematically leveraging the value of firm-created intellectual property such as documents, insights and experiences, but there are many different ways to do that ranging from informal sharing to sophisticated computer systems.

While some experts treat KM as an independent area, we see it as a key component of the larger discipline of legal project management (LPM). For example, in our LPM coaching programs, lawyers often share and improve checklists that they already have, and some of these quick wins evolve into more ambitious and formal KM efforts. At a recent workshop we conducted for the Ark Group, client John Paris described one of the sophisticated templates Williams Mullen has developed to increase efficiency: a “Road Map for Undertaking a Rule 506 Private Placement” outlining best practices for the firm’s private equity group. Similarly, as described in last week’s post, Bilzin Sumberg, another client and Ark panelist, has established an LPM sustainability committee whose mission includes identifying existing firm documents that can be used as templates for future legal projects so that professionals at the firm don’t constantly have to reinvent the wheel.

A fair number of the decision makers I’ve interviewed for my current research are in the process of expanding their KM programs. Consider, for example, these quotes from three of the interviews:

We are launching a brand new intranet here in about three or four weeks. I think it will be a game changer in a lot of ways, because we’re doing it in a way that it should improve the way every single person in this firm performs their job. We have built certain efficiencies into the program, and lawyers will have access to much more information than they’ve had in the past. It’ll be really interesting to see if we can accomplish all that we want to through this change, much of which is driven by trying to leverage our knowledge management…

Knowledge management has come to the fore a little bit in the last year or so, as we have heard and begun to realize that there is some value in it. We’ve had actually a pretty robust version of that institutionalized for many years. But at the practice group level now I think there’s beginning to be a greater appreciation for the value that that brings to client service… I’ve seen some progress on the understanding that our internal work product has some value and can be shared and leveraged more than we have been accustomed to doing, and that you can bring that to bear for more efficient client service.

We’re starting to do more knowledge management, with the expectation that it will improve efficiency and allow us to deliver the same legal services in a more cost-effective manner.

But will they get the benefits they are looking for? Some firms certainly have, as you can see in these quotes from three other firms that are further along in their KM efforts:

Knowledge management has been very, very positive for us… We have 12 attorneys in a firm of nearly 1,000 that just do knowledge management. So we’ve spent a lot of time there.

We’ve been at the knowledge management business for years… Our corporate group, our funds group, and our private equity group have done an especially good job.

We have brief banks, and we have form files, but we may need to accelerate our efforts there to keep up in terms of innovations and the way we deliver services.

But, on the negative side, here’s what three other firms said about their experience to date:

I think it’s tough to make a KM investment pay off, because it’s such a huge project to really maintain it, and we’re not in the widget business. We have some commoditized practices, but that’s a very small percentage of our overall work. It’s questionable whether the knowledge management model is really worth the effort.

We, like many other firms, have been disappointed in the knowledge management systems that have been available to firms over the past decade. The systems have not produced the productivity gains promised.

We put a lot of time into our knowledge management system before the lawyers working on it got frustrated because everybody had their own idea about how it should be set up. It’s very hard to get several hundred lawyers all committed to the same exact system and to put in the time necessary to make it work… We just haven’t found the best ways to make documents prepared by lawyer A easily findable and searchable for lawyer B. People aren’t going to sit down and do the type of indexing that you really need, and it’s always tweak this or tweak that, and there are still people who say, well yeah, this document was so negotiated, I don’t want anybody else to see it, and then there’s people’s general reluctance to allow access to work that someone else may criticize. We just don’t have as good a knowledge management as I know we ought to be capable of generating.

Exactly what’s the difference between KM initiatives that work well and those that don’t? As we analyze the data over the next few months, we hope to find some hints. But in our research, the KM discussions were short since this is just one small part of the much bigger picture of value and profitability. Those who want a complete answer may have to wait for someone to do a study that focuses exclusively on KM and exactly how it is implemented at different types of firms.

As with so many things in life, the basic idea is easy to agree with: of course it makes sense to share documents and leverage the value of a firm’s intellectual property. But when you dig into the details of exactly how to do this, the answers get more complex and controversial.

December 18, 2013

A key step in Bilzin’s LPM progress was the purchase of Thompson Reuters’ ENGAGE software to improve both initial budgeting and tracking spending. In our opinion, most of the firms who install ENGAGE or one of its competitors buy the software too soon, at a time when management recognizes the need for LPM but rank and file lawyers do not Bilzin is one of the very few firms that bought LPM software at the right time: after their lawyers asked for it. The initial impetus came not from visionaries on the executive committee, but rather from a broad range of partners who had begun tracking budgets carefully, and who wanted better tools.

ENGAGE has built-in a set of templates which break complex legal matters down into a series of smaller steps to improve planning and tracking. Marlon Thompson, a financial analyst and member of the LPM committee, has been assigned the task of talking to every lawyer who went through the LegalBizDev coaching process to ask each of them about the templates they are already using in their day-to-day work. He then adapts the ENGAGE templates to match the lawyers’ experience and needs.

Executive director Michelle Weber summed up the advantage of this approach: “By the time lawyers are on ENGAGE what they’re looking at is familiar and something they liked. This builds on one of the parts of the LegalBizDev program that I appreciated the most: lawyers don’t have to change their world. They just have to change what they do a little bit.”

Thompson described his responsibility as support – to “help the attorneys create and adhere to their project plan, and to convert it into dollars and cents. It’s one thing for us to say we have a budget and a plan, and it’s another thing when clients want to hold us to that. The software tools that we have can help us do exactly that, and to minimize the costs to the client and the firm.”

Thompson said that he is the key point person for the firm in terms of training attorneys to use ENGAGE and that the firm is now going through a beta testing process. “There is so much more to be done,” he said. “One of the key aspects is the use of phase and task codes. This enables us to analyze our work down to the smallest possible unit. It is impossible to budget without them.”

Thompson said the firm started with the American Bar Association’s phase and task codes but added carefully tailored task codes for the firm’s practice groups, codes that are unique to the firm yet fit within the ENGAGE software. “I am now beginning the training of the testing team of attorneys – at least one from each practice group – to develop the task codes and apply them to their work,” Thompson said.

Paul Vandermeer is also an active member of the LPM committee, and reported: “As soon as the committee got started, I developed a document for each practice group to keep track of their use of LPM. We are now working with the groups to keep it up to date.”

KM is a very important part of that process. “For example, the land use group has certain documents that they want created – including some saved searches that they use all the time,” Vandermeer recalled. “So I made sure to save these key searches on the intranet of our document management software.”

“Even in the library, we receive daily reports of Lexis and Westlaw usage by attorney, and we can help each attorney reduce his or her costs to the firm if he or she is not searching as efficiently as possible,” Vandermeer said. “These days, one needs to search for as much efficiency as possible in every area.”

Some examples of how all this works in the trenches came from Jay Sakalo, head of the firm’s bankruptcy and restructuring practice, and also a member of the LPM committee.

“Let’s say we want to do a motion to lift the automatic stay in bankruptcy court,” Sakalo says. “We want to create forms to show what such a motion looks like. It’s important for us to start with a bank of such documents so that our clients don’t overpay us.”

Sakalo says his group is constantly deciding which documents – created by Bilzin attorneys or by others – should go into the firm’s document bank. These can include litigation documents or bankruptcy documents like plans of reorganization or asset sales.

“The way we work in our department,” said Sakalo, “is that everyone in the group has access to each document in the index. But we will have a conversation before the lawyer just takes it. Before we use a document, there is a human process.”

Sakalo said that since bankruptcy lawyers usually file petitions in court to be paid for their time, they have been using task- and category-based codes for decades to substantiate the time they are claiming. “As we move toward the use of task codes as a firm wide requirement because of the need to implement LPM, my department is looked to as a guiding light… At the firm level, all practice group leaders now try to ensure that they maximize the use of LPM in their practice – each group in its own way because one size does not fit all,” he concluded.

What does Bilzin have planned for the future? Partner commitment has reached critical mass, and no further coaching is required. However they are currently considering how to train associates to continue to push the firm through the uncharted wilderness of a complete transformation to new levels of efficiency.

In terms of what they have accomplished so far, Steve Barrett, the LegalBizDev principal who coached all 26 partners at Bilzin, ended most of the coaching programs by asking for written summaries of lessons learned in key areas. After reading all these reports, Executive Director Michelle Weber said “if I were to distill the entire program into one highlight, one thing that everyone learned and changed, it was improved communication. It sounds so simple, but improving communication with clients and within the firm is very hard, and we still have a lot of work to do.”

December 11, 2013

When I researched a series of case studies for my book Legal Project Management, Pricing, and Alternative Fee Arrangements, I wrote that “Bilzin Sumberg has made more LPM progress more quickly than any other law firm” (p. 89). Now, one year later, this Miami based commercial law firm remains in the lead due to its management commitment to sustaining progress, and its unrelenting emphasis on increasing efficiency.

It would be nice to be able to report that once they completed the coaching, their LPM work was done, but in fact it was just beginning. It is true that the firm’s clients have already seen significant benefits in reduced costs and greater responsiveness, and this in turn has led to new business. But when we interviewed firm leaders for this follow-up report, they used phrases like “baby steps,” “infancy stage,” and “aspirational rather than obligatory” to describe the firm’s current use of LPM.

They should see the other guys. We spend our lives looking behind the curtain at a wide variety of law firms, as we work with them to increase efficiency. Many firms have individual lawyers or practice groups that are quite advanced in LPM, but none can say that it has taken hold across the entire firm.

There are certainly dozens of firms that have put out more press releases than Bilzin announcing their LPM success. Many firms also started working on LPM years before Bilzin did, and many others have spent far more per lawyer.

But no law firm on the planet has achieved more behavior change, more quickly or more efficiently. LPM aims to change habits that have been reinforced over decades, and that kind of change will always occur one small step at a time.

But according to Paul Vandermeer, the firm’s director of knowledge management, “The more successes we have gotten, the more converts we obtained, and the more that LPM has permanently changed the way we do business.”

One of the most important steps that Bilzin took in the last year was the formation of an LPM committee to monitor and sustain progress, chaired by Michelle Weber, the firm’s executive director for the last 19 years. Michelle has the kind of personality that takes naturally to the organized and disciplined aspects of LPM, and once told us “if ever I get tired of my job, I’m going to become a Certified Legal Project Manager®, because I love this stuff.”

Practice group leaders are required to report regularly to the committee and to the managing partner about how they are applying LPM and what works best. “We’re following this so tightly because it’s an enormous priority,” said Weber. The result is that best practices are spreading.

Many changes were quite simple but extremely effective. For example, she noted that: “As matters come in, we routinely have a discussion at the outset with all team members, including paralegals, so that everybody understands what the scope is. At the same time, we discuss the task codes that everyone’s going to use, so we don’t have major problems with consistency later.”

Knowledge management (KM) is also a key part of this initiative, and each practice group is identifying “information that should be highlighted and easily accessible, ranging from legal forms to white papers, so people can stop reinventing the wheel.” As with so many things in life, success is often based on the details.

As one example, Weber reported something she “tripped over in a discussion with an associate… that rocked my world.” The problem was that associates were writing up their legal research – including ideas that could be made part of the firm’s permanent knowledge base – in emails. However, the firm’s KM software collected information by crawling only through PDF files and Word files, not through emails. As a result, many possible efficiencies were being missed. Needless to say, the process has been changed so that those results are now captured into the KM system.

December 04, 2013

Prepare for your next business development lunch by listing a few questions that will make it easy for your client to do most of the talking. Here are two of our favorites:

What are some of the things you’ve liked most about working with law firms, both ours and others?

What have you liked least about working with law firms?

The first Wednesday of every month is devoted to a short and simple tip to help lawyers increase efficiency, provide greater value to their clients and/or develop new business. For a list of 65 additional questions you might ask, see my book the Legal Business Development Quick Reference Guide.